Honda to Build New Automobile Plant in Mexico for Production of Subcompact Vehicles, Starting in 2014

8/12/2011 2:00:00 PM

Honda de Mexico, S.A. de C.V., (HDM), Honda's production and sales company in Mexico, today announced that it will build an automobile plant for production of fuel-efficient subcompact vehicles for the Mexican and North American markets. Honda will invest approximately US$800 million to build the plant, which is scheduled to begin operation in 2014.

Expected to employ approximately 3,200 associates at its full annual capacity of 200,000 units, the plant will occupy a 5.66 million square meters site in a suburb of Celaya, Guanajuato, about 210 miles east of HDM's two existing plants in El Salto, Jalisco, which build automobiles, motorcycles and auto parts.

The new Honda plant will apply Honda's advanced and highly efficient manufacturing system to produce vehicles and engines. By increasing use of local parts and materials, together with global parts sourcing, the new plant will provide customers with high-quality products at an affordable price.

The plant will be the eighth Honda auto plant in North America - and its 10th auto assembly line - and will boost Honda's capital investment in its North American operations to nearly US$21 billion. Honda employs more than 33,000 associates in North America. Production operations related to automobiles include four auto plants, two auto engine production facilities and two transmission plants in the United States, two auto plants and an auto engine plant in Canada, and an auto plant in El Salto.

The new plant in Mexico will increase Honda's automobile production capacity in North America from the current 1.63 million units to 1.83 million units in 2014. In 2010, more than 87 percent of Honda and Acura cars and light trucks sold in America were produced in North America.

"With growing demand for fuel-efficient vehicles, this plant will increase Honda's ability to meet customer needs for subcompact vehicles from within North America," said Tetsuo Iwamura, president of American Honda Motor Co., Inc. and chief operating officer for Honda's North America Region. "This new plant will further strengthen the foundation of Honda's North American business by enabling Honda to more flexibly respond to changing market conditions from within the region."

In North America, Honda produces global models such as Civic, Accord and CR-V as well as region-specific light truck models including the Odyssey and Pilot. The smallest automobile currently produced by Honda in North America is the compact Honda Civic, which is built at Honda plants in Indiana and Ontario, Canada.

In addition to the new auto plant in Mexico, Honda recently announced plans to expand production at several of its plants in the U.S. and Canada:

The Honda plant in Greensburg, Ind., which builds the Civic Sedan and Civic Natural Gas vehicle, will add a new second shift in October of this year.

The Marysville, Ohio, auto plant which builds the Accord Sedan and Coupe, and the Acura TL, will reinstate second-shift production on Line 1 by the end of 2011, returning to full, two-shift production for the first time since January 2009.

In Canada, Alliston Plant 1, which builds the Civic Sedan, Civic Coupe, Civic Si coupe and sedan, and the Civic HF, will return to full, two-shift operations in September. In May, the plant consolidated its two shifts into one-shift operation to cope with parts supply issues following the earthquake in Japan.

Honda will make a significant commitment to limit the environmental impact of the new plant in Mexico. The new plant will employ advanced methods of energy and emission reduction with the goal to become a "zero waste-to-landfill" factory. Already, Honda has 10 zero waste-to-landfill plants in North America, with four more operating with virtually zero waste-to-landfill, including the two existing plants in Mexico.

Further, every major Honda plant in North America has met the ISO 14001 international environmental management standards except the new auto plant in Indiana, which is now working toward certification.

About Honda de Mexico

HDM was established in September 1985, and began sales of motorcycle products in 1987. In March 1988, HDM started production of motorcycle products and automobile service parts in El Salto, Jalisco. An adjacent auto production plant opened in 1995 with production of the Honda Accord, switching to production of the Honda CR-V in 2007. HDM's current annual auto production capacity is 60,000 units.

Honda auto sales in Mexico have been growing steadily with increasing market demand in Mexico. In 2010, sales of Honda and Acura brand automobiles totaled approximately 40,000 units in Mexico - an increase of 7 percent from the previous year.

About Honda Manufacturing in North America

Based on Honda's longstanding commitment to "build products close to the customer" Honda currently operates 14 manufacturing facilities in North America, producing a wide range of Honda and Acura automobiles, automobile engines and automatic transmissions, Honda all-terrain vehicles, and Honda power equipment products such as lawn mowers, mini-tillers and general purpose engines.

Honda started local production in the U.S. in 1979 with motorcycle production. In 1982, Honda became the first Japanese automaker to produce passenger cars in the U.S. Honda has continued to expand its local production capabilities, and cumulative automobile production in North America surpassed 22 million units in 2010. Honda products are made in North America using domestic and globally sourced parts.